the 2016 ponemon cost of a data breach study

Key findings from the 2016 Cost of Data Breach Study: Global Analysis BENCHMARK RESEARCH SPONSORED BY IBM INDEPENDENTLY CONDUCTED BY PONEMON INSTITUTE JUNE 2016

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Introducing our speakers

Adam Trunkey, Portfolio Marketing Security Services, IBM Security [email protected]

Larry Ponemon Chairman and Principal The Ponemon Institute [email protected]

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The 2016 Cost of Data Breach Study covered 383 companies in 12 countries and 16 industries

Countries Industries

Hospitality, 2% Media, 2%

Health, 2% Life science, 2%

Transportation, 4% Communications, 4%

Energy, 5%

Consumer, 7%

Public, 8%

Retail, 9%

Financial, 14%

Industrial, 14%

Services, 12%

Technology, 12%

Research, 1% Education, 1% South Africa

5% Italy 6%

Canada 6%

Arabian Cluster 6%

Australia 7%

Japan 7%

France 8% Germany 9%

Brazil, 8%

India, 10%

United Kingdom, 11%

United States, 17%

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Understanding these will help you understand the report findings

A mega-breach of more than 100,000 records is not considered typical. The cost data in this study cannot be used to calculate the financial impact of a mega-breach over 100,000 records.

Data breach An event in which an individual’s name plus a medical record or financial record or debit card is potentially at risk

Data record Information that identifies the natural person (individual) whose information has been lost or stolen in a data breach

Incident For this study, a data breach involving between approximately 3,000 to 100,000 compromised records

Participants Organizations that experienced a data breach within the target size range

Benchmark research The unit of analysis is the organization; in a survey, the unit of analysis is the individual

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Key finding: the cost of a data breach continues to rise

Global average Global average

$158 15% since 2013 $4M 29% since

2013

Highest countries Lowest countries Highest countries Lowest countries

$221

$213 UNITED STATES

GERMANY

$100

$61 BRAZIL

INDIA

Cost per record Cost per incident

$7M

$5M UNITED STATES

GERMANY

$1.8M

$1.6M SOUTH AFRICA

INDIA

Currencies converted to US dollars

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Growth in four areas contributed to the increase in data breach cost

5.4%

3.2%

2.9%

2.9%

Average total cost

Average size

Abnormal churn

Per record cost

Abnormal customer churn—customers lost following a data breach—translates into lost business

Percent of increase over 2015


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The largest component of the total cost of a data breach is lost business

Detection and escalation $1.09 million

Notification $0.18 million

Lost business cost $1.63 million

Ex-post response $1.10 million

Components of the $4 million cost per data breach

$4 million

Forensics, root cause determination, organizing incident response team, identifying victims

Disclosure of data breach to victims and regulators

Help desk, inbound communications, special investigations, remediation, legal expenditures, product discounts, identity

protection service, regulatory interventions

Abnormal turnover of customers, increased

customer acquisition cost, reputation losses,

diminished goodwill


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The per-record cost of a data breach varies widely by industry

$80

$112

$129

$131

$133

$139

$145

$148

$156

$164

$172

$195

$208

$221

$246

$355

Public

Research

Transportation

Media

Consumer

Hospitality

Technology

Energy

Industrial

Communications

Retail

Life science

Services

Financial

Education

Healthcare

Healthcare and finance experienced larger costs

Average cost per record breached Currencies converted to US dollars

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Time to identify and time to contain a data breach also affect cost

$3.18

$4.35

MTTC < 30 days MTTC ≥ 30 days

$3.23 $4.38

MTTI < 100 days MTTI ≥ 100 days

Mean time to identify (MTTI) Mean time to contain (MTTC) (The time it takes to detect that an incident has occurred)

(The time it takes to resolve a situation and ultimately restore service)

Total cost, in millions Total cost, in millions


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Hackers and criminal insiders cause the most data breaches

Malicious or criminal attack

48%

Human error

25%

System glitch

27%

$133 per record to resolve




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The incidence of malicious attack varies considerably by country

60%

54%

52%

52%

51%

50%

50%

46%

46%

41%

39%

37%

24%

21%

26%

30%

24%

27%

23%

27%

25%

35%

30%

26%

16%

25%

22%

18%

24%

23%

27%

27%

29%

24%

30%

37%

Arabian Cluster

Canada

Japan

Germany

United Kingdom

United States

France

Australia

Italy

India

Brazil

South Africa

Malicious or criminal attack System glitch Human error

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Organizations in certain countries are more likely to experience a data breach of 10,000 or more records over a two-year period

15%

16%

17%

22%

23%

24%

24%

31%

31%

32%

33%

40%

Germany

Australia

Canada

Italy

United Kingdom

Japan

United States

Arabian Cluster

India

France

South Africa

Brazil

Average likelihood of experiencing a breach of 10,000 or more records over a two-year period

26%

Probability that an organization will experience a data breach over two-year period

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Key factors that you can apply to help reduce the cost of a data breach

$7.00

$8.00

$9.00

$9.00

$9.00

$13.00

$16.00

CISO appointed

Extensive data leak protection

Business Continuity Management involvement

Participation in threat sharing

Employee training

Extensive use of encryption

Incident response team

All cost savings have increased over the last year

Amount by which the cost-per-record was lowered Currencies converted to US dollars

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Seven global megatrends have emerged from 11 years of cost of data breach research studying 2,013 organizations

1 This is a permanent cost that organizations must be ready to deal with

Lost business is the biggest financial consequence of a data breach

Criminal and malicious attacks are the most common, costly and difficult to address causes

Cost is directly related to the time it takes to detect and contain a breach

5 Regulated industries such as healthcare and financial services have the most costly breaches

Improvements in data governance programs will reduce the cost of a data breach

Data loss prevention technologies are important for preventing data breaches

234

67

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Read the full report to learn more

Visit ibm.com/security/data-breach and register to receive the global study or a country-specific study

Visit ibm.com/security/services to learn how IBM Security Services can help protect your organization

Visit www.ponemon.org to learn more about Ponemon Institute research programs

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Questions:

Q+A

ibm.com/security

securityintelligence.com

xforce.ibmcloud.com

@ibmsecurity

youtube/user/ibmsecuritysolutions

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Appendix

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Total cost of data breach over four years

$3.02

$3.52 $3.79

$4.00

2013 2014 2015 2016 Total average cost ($millions)


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2016 total cost of data breach, by country

$1.60

$1.87

$1.92

$2.44

$3.26

$3.30

$3.95

$4.61

$4.72

$4.98

$5.01

$7.01

India

South Africa

Brazil

Australia

Italy

Japan

United Kingdom

Arabian Cluster

France

Canada

Germany

United States

Currencies converted to US dollars Total average cost per country ($millions)

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Per-record cost of a data breach since 2013

$136

$145

$154

$158

2013 2014 2015 2016 Average cost per record


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2016 per-record cost of a data breach

$61

$100

$101

$131

$122

$142

$156

$159

$196

$211

$213

$221

India

Brazil

South Africa

Australia

Arabian Cluster

Japan

Italy

United Kingdom

France

Canada

Germany

United States

Average cost per record, per country